The Retail Industry

1
The Retail Industry

• Marco Aguarón
• Francisco de Gomis

2
Clives comments

• Excellent review of market
• Great research
• Perhaps more financial evaluation
• Great summary of strategy

3
Agenda

• Industry Overview
• Analysed Companies
• Quantitative Information
• Conclusions

4
Definition and Types

• The retail industry is a sector of the economy
  that is comprised of individuals and companies
  engaged in the selling of finished products to
  end users.

5
Industry Overview

Top Five Segments Value USD bn
Specialty Stores 5.3
Distributors 4.4
Department Stores 2.4
General Merchandise Stores 1.6
Home Furnishing Retail 1.0
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Trends I
7
Trends IINet Income and EBIT as a percent of
sales in the two decades
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Top Ten Retail Industries 2010
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Analyzed Companies
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Walmart

• Walmart serves customers and members more than
  200 million times per week, at more than 9,826
  retail units, under 60 different banners, in 28
  countries.
• 2010 sales of 405 billion.
• Walmart employs 2.1 million associates worldwide.
• Company goal Saving people money to help them
  live better.

11

• VS

12
Carrefour

• The worlds second-largest retailer and the
  largest in Europe.
• Operates in three major markets Europe, Latin
  America and Asia. With a presence in 32
  countries.
• The Carrefour group currently has over 9,500
  stores, either company-operated or franchises.
• Sales 112.245 billion euros
• Employees more than 471,000

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Winner Walmart

• More clear financial information in their site.
• Largest retailer in the world
• Very clear business strategy.
• Very friendly investor relations and services.
• Walmart ranked in the top ten among retailers in
  Fortune Magazines 2010 Most Admired Companies
  survey.

14
Auchan

• 1.9 billion customers (till receipts) in
  hypermarkets and supermarkets in 2010.
• 705 million of profit for the year 2010.
• Auchan is present in 12 countries and region and
  develops its activities through its core
  businesses hypermarkets, supermarkets, real
  estate, banking and e-commerce.

15

• VS

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Eroski

• Spanish supermarket chain with nearly 1,000
  outlets spread across Spain.
• Cooperative with over 50,000 employees.
• The establishments vary in size from the largest
  hypermarkets, simply named 'Eroski' (of which
  there are 75 stores, including 40 with petrol
  stations), down to smaller 'Eroski Center' stores
  (473, including 2 petrol stations). There are
  also 219 'Eroski City' outlets and 234 'Eroski
  Viajes' travel agent centers.
• The group's total sales floor space is
  approximately 1,500,000 square meters.
• Nowadays they are running a rigorous strategy to
  cut down their debt, thats why they are in a
  process of downsizing their stores.

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Winner Auchan

• They have much more clear information.
• Their are better off.
• They are much bigger.
• They are a multinational.

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Walmart Carrefour Auchan Eroski
CSR
HHRR
Business Strategy Clarity
Transparency
Timeliness
Availability of historical information
Shareholder information
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Walmart Quantitative Information

• Liquidity ? Current ratio 8,7
• Profitability ? Net profit margin 3,5 (Ind.
  Average 0.98)
• Efficiency ?Days of inventory turnover 9,1
• Shareholder ?Dividend cover3,41
• Risk ?Beta rating 0,6
• Bankruptcy ? Z Altman 3,94

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Auchan Quantitative Information

• Liquidity ? Current ratio 0.71
• Profitability ? Net Profit Margin 2.86 (Ind.
  Average 0.98)
• Efficiency ? Days of Inventory 37.83
• Shareholder ? Dividend Cover 68,5
• Du Pont Formula ? 9,1

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Conclusions

• It is a very important sector 2/3 of the U.S.
  GDP comes from retail consumption.
• Supermarkets achieve the highest sales of the
  retail industry.
• Until the crisis, their EBIT and net income were
  increasing. Nowadays, they are at a bad moment.
• It is quite a concentrated sector top 10
  retailers ?30 of top 250 retailers.

22
Conclusions

• Walmart has good liquidity and good
  profitability. Although Auchan has much better
  ratios in terms of efficiency and shareholder
  earnings.

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• Thank you for your attention!!